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Drugmaker GSK to invest $200 mln in African factories, R&D

Mon, 31st Mar 2014 10:00

* Up to 100 mln pounds for new drug manufacturing in Africa

* GSK looks at Rwanda, Ghana and Ethiopia for new factories

* Further investment in drug R&D focused on continent

By Ben Hirschler

March 31 (Reuters) - Drugmaker GlaxoSmithKline plansto invest up to 130 million pounds ($216 million) in Africa overthe next five years as it bets on the importance of thecontinent in driving long-term demand for medicine.

The decision reflects the pharmaceutical industry's growinginterest in Africa, given improved economic growth and risingdemand for treatments against chronic diseases that are becomingmore common among urban middle classes.

France's Sanofi has also highlighted Africa as apromising growth market.

Sub-Saharan Africa currently accounts for only around 500million pounds of GSK's annual sales, which totalled 26.5billion pounds in 2013, but the group sees potential forsignificantly greater sales in future as African economies grow.

The rise of non-communicable diseases (NCDs) like heart andlung disorders, diabetes and cancer is changing the market fordrugs in Africa and increasing demand for new products beyondtreatments for acute infections.

NCDs are expected to account for 46 percent of all deaths insub-Saharan Africa by 2030, up from 28 percent in 2008,according to the World Bank.

GSK Chief Executive Andrew Witty, who set out his firm'splans at a conference in Brussels on Monday, said up to 100million pounds of the new money would be used to expandmanufacturing in Nigeria and Kenya, and to build as many as fivenew factories.

GSK, which currently makes drugs in Kenya, Nigeria and SouthAfrica, is reviewing possible factory locations in countriesincluding Rwanda, Ghana and Ethiopia.

In addition, Britain's biggest drugmaker will invest 25million pounds to create the world's first open-access researchand development (R&D) laboratory for NCDs in Africa.

The overall investments will create at least 500 jobs - asubstantial increase on the 1,500 currently employed by GSK insub-Saharan Africa.

The R&D centre will allow GSK scientists to work withoutside researchers to investigate the specific needs of Africanpatients with chronic diseases by focusing on variations in thenature of certain illnesses on the continent.

An above-average number of Africans with high bloodpressure, for example, appear to be resistant to medicaltreatment and there is also a high prevalence of aggressivebreast cancer in younger women. The aim is to find new drugs toaddress the specific needs of such African patients.

Additional funding will also be funnelled into establishing25 academic chairs at African universities and increasingsupport for community health worker training.

GSK has been stepping up its exposure to many of the world'semerging markets in recent years by increasing investment inlocal supply lines and sales forces, striking deals, and buyingout minority shareholders in certain subsidiary businesses.

Last week it took full control of its consumer healthcareunit in Indonesia, after recently increasing its stake in localunits in India.

Witty has made emerging markets a key growth platform forGSK. He has stuck with the strategy despite recent problems inChina, where the company's sales have been hit by briberyallegations.

($1 = 0.6011 British Pounds) (Editing by Mark Potter)

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